China Investment February 2017

China: Investment set to support growth in Q1

March 14, 2017

In the first two months of the year, urban fixed-asset investment (FAI), excluding rural households, expanded 8.9%. The print was above the 8.1% increase in the full year 2016 and represented the strongest growth in seven months. The acceleration in the January-February period was the result of a strong performance in the tertiary sector, while activity in the primary and secondary sectors eased slightly compared to December. The closely-watched real estate development indicator expanded at the fastest pace in two years, suggesting that dynamics in the property sector remain buoyant. Infrastructure investment was also buoyant at the outset of the year.

Analyzing January-February’s data from the ownership side, investment growth among state-owned and state-holding units remained strong but decelerated to an over one-year low. Conversely, activity among private companies accelerated from a meagre 3.2% in the full year 2016 to a 6.7% expansion in the January-February period.

A month-on-month comparison shows that investment in urban fixed assets rose a seasonally-adjusted 0.77% in February, slightly above the 0.74 increase in January.

FocusEconomics Consensus Forecast participants expect fixed-asset investment to grow 8.1% in 2017, which is up 0.2 percentage points from last month’s Consensus. In 2018, the panel sees fixed-asset investment growth at 7.7%.

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House prices in 70 large- and medium-sized cities rose 0.9% in November in month-on-month terms according to a weighted average index calculated by Thomson Reuters from data issued by the National Bureau of Statistics (NBS).

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